China Responds to US AI Sanctions Threat

China announced it would take all necessary measures to protect its interests after the US threatened sanctions against Chinese AI companies. Washington claims that Chinese companies misused American models to train rival systems.

In a statement, China’s Ministry of Commerce (MOFCOM) criticised the US for politicizing and weaponizing technology and economic issues, accusing it of using unfounded allegations to stigmatize Chinese companies and impose sanctions. It warned that if the US takes any action that materially harms China’s interests, it would act to firmly safeguard its legitimate rights and interests.

China hit back after US Treasury Secretary Scott Bessent posted on social media platform X last week that sanctions and trade restrictions would be on the table if Chinese companies conducted covert, industrial-scale distillation attacks that cross the line into IP theft. His remarks echoed earlier allegations from OpenAI and Anthropic that Chinese AI companies including DeepSeek, Alibaba, and Moonshot used model distillation to develop competing systems at a fraction of the cost.

MOFCOM rejected the claims as having no factual basis and no legal justification, while describing the potential measures as a typical example of AI hegemony that applied double standards. It also defended model distillation as a common industry technique, claiming that many US AI companies have also distilled Chinese models during research and development. It further argued the US government was ignoring the very close release dates of Chinese and US AI models, adding that some domestic Chinese offerings had already achieved leading capabilities.

MOFCOM added that many companies within the US industry have publicly opposed US threats to sanction Chinese AI firms, stating that nearly 200 US start-ups had urged the government not to restrict access to Chinese open-source AI models over concerns such a move would undermine American competitiveness. To that end, the regulator urged the country to abandon its hegemonic mindset and stop smearing Chinese companies and threatening them with sanctions.